Artificial Intelligence’s Potential and Drawbacks in the Trading Environment
In a new collaboration to architect data infrastructure from the London Stock Exchange Group (LSEG) and the development of perceptive next-generation productivity, Microsoft has bought a 4% equity stake in the LSEG which has made some heads turn in the financial and technical world.
As part of the agreement, the two businesses will collaborate to build new data and analytics-related products and services on Microsoft Azure, AI, and Teams.
The experience for traders and its clients across the financial markets is anticipated to improve greatly, thanks to the development of LSEG’s own data platform leveraging the Microsoft Cloud.
David Schwimmer, LSEG’s chief executive said: “We believe our partnership with Microsoft will transform the way our customers discover, analyse and trade securities around the world, and create substantial value over time.”
The question that comes to mind right now is whether AI is secure enough to be used in the financial world.
With AI slowly taking over the arts world creating otherworldly images simply by using keywords, it demonstrates how powerful this technology is. With more and more machine learning implementations appearing on the internet, it begs the question, can it disrupt the financial market on its own?
Tanmay Pothbare, a master’s student at the University of Dublin studying Machine Learning and AI, stated: “AI is too disruptive at the moment, its a fairly new technology for even experts to say it is safe for people to use in their day to day life, let alone the financial market.”
With AI technologies being used to predict the stock forecast, it can raise a lot of problems in the economy.
Tanmay added: “The biggest example of this is the Hathaway Effect. According to the Hathaway Effect, the stock price of Warren Buffett’s company Berkshire-Hathaway increases whenever Anne Hathaway is in the news. Later, Berkshire-Hathaway itself mentioned the impact during a shareholder meeting and in various company communications. With AI using technical and fundamental analytics to predict the stock market it makes us worry whether a more dangerous version of this effect can come into play with a bigger software like Microsoft Azure comes into the picture.”
Microsoft being the technological giant that it is, there are very low chances of this happening or it affecting the stock market. However, LSEG’s plans of incorporating more and more AI into the financial market beg the question is AI safe enough at this early stage to be a part of the economy.